Professional Documents
Culture Documents
Incomplete records
Prepared by: Mdm. Jeya Lachimi
Subject: Financial Accounting 2
*What is Incomplete records?
*Reasons for incomplete
records?
*Calculations of profit for the
year in the absence of proper
records with examples.
*CONTENTS
*What is incomplete records??
$ $
Sales 100,000
(-) Cost of sales
Opening inventory/stock 10,000
Purchases 78,000
closing inventory/stock 13,000 75,000
Gross profit 25,000
*Suppose the closing
inventory/stock has been
destroyed by fire, along
with all the inventory/stock
records. Then we wouldn't
have the closing
inventory/stock total to
include in our trading
account. However, we can
calculate it if we know the
gross profit percentage on
sales - or, of course, the
mark-up on cost of sales.
* In the example above, gross profit is 25% of
sales. If we are told this, we can insert the
gross profit of $25,000 and so calculate the
missing inventory/stock figure as a balancing
item. We can also find a missing purchases
figure, or even a missing sales figure.
* Suppose we are given:
* We are also told that gross profit percentage
on sales is 25%. If gross profit is 25% on sales,
cost of sales must be 75%. The sales total is
therefore:
$75,000 x 100/75 = $100,000.
* Whenever the gross profit percentage is given
in an incomplete records question, you know
that this technique is needed.
* Missing figures for cash
We may be given details of cash receipts and
payments plus details of opening and closing
balances, but with one figure missing, often
the proprietor's drawings. We can calculate the
missing figure by setting up a cash account to
find the balancing item required.
* Here are the incomplete records techniques:
*TIME FOR
TUTORIAL!
*THANK YOU